Subject: Income tax rebate for HBA taken for 2nd house.
I had taken house building advance in 1998. I am paying EMI of rs. 3049/- and availing rebate in taxable income upto rs.30,000/-. Is it possible to take new HBA for 2nd house and claim benefit in taxable income upto rs. 1,50,0000/- instead of 1st HBA.( I mean I will not then claim deduction in taxable income for the H.B. advance taken for the first property.
For this purpose your first house will get taxable as house property deeming it as let out however your can claim either house as self occupied and get deduction for 1.5 lacs. The first house also can be claimed as self occupied depending upon some criteria
the deductions available U/s 24 of The Income tax Act 1961 is as follows 24. Deductions from income from House Property. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely :
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23; the amount of deduction shall not exceed thirty thousand rupees:
Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed [within three years from the end of the financial year in which capital was borrowed]the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.
Explanation.Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years.]
[Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.
Explanation.For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to capital borrowed, for the purpose of repayment of such capital.]
hi A.M, as per the tax rules,you are not eligible to claim tax benefit for the new HBA for 2nd house.when you complete all the payments and settle the first house building advance,then only you are eligible for tax benefit of 2nd house..
so you have to select some other tax benefit options for the taxable income upto Rs 1.5 lakhs.
it is better to consult tax analyst/accountant for other options and get more clarity regarding your problem.
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